The European economy is still struggling eight years after the depths of the Great Recession and European stocks have likewise had their problems. But not all European stocks are losers. In fact, Morningstar writes about 3 European stocks with growth prospects.
The first company is Deutsche Boerse (DB1). They run the German Stock Exchange and also a collection of OTC and derivative exchanges, the largest ones across Europe. They have just announced last month that they want to take over the London Stock Exchange to create a pan-European powerhouse in terms of financial transactions, settlements, clearing. It would just dwarf anyone else globally let alone just in Europe.
Second is Prosegur (PRHA) which is a Spanish security company. They are both pan-European and also Latin American in outlook with growing business in Asia, places like Singapore and Australia. They have by far the best reputation from a conservative aspect in terms of running the business compared to peers.
The third stock is WHSmith (SMWH) in the U.K. This is a business that has managed to again eek out returns when they’ve had the kitchen sink thrown at them from a macro perspective. 2015 was the first time that like for likes and revenue growth was not negative in the company.
But over the last 15 years this company has grown profits and the stock is up 150%.
These are just three European stocks that are not losers. Aside from picking individual winners among European stocks the merger of Deutsche Boerse and the London Stock Exchange has potential for investors as well.
Deutsche Boerse and London Stock Exchange Merger
If the proposed stock exchange merger goes through it will create the largest stock exchange by revenue and second by market value fitting in between CME Group and ICE (New York Stock Exchange, etc.).
LSE-Deutsche Boerse would be the world’s biggest exchange operator by revenue and second-largest by market value, sandwiched between CME Group Inc. and ICE. Chicago-based CME is also assessing whether to make a bid, according to people familiar with the matter. A combination of LSE and ICE would create a new global leader, with a market value about $10 billion greater than CME’s.
The new exchange operator will have a dominant position in Europe from which to expand into both Asia and the U.S. It will be a powerhouse for clearing listed derivatives in Europe and over-the-counter contracts. The Euro Stoxx 50 Index, the FTSE 100 Index and the DAX Index will all be under one roof.
Combining these exchange will all investors one stop shopping for a wide range of investments in Europe and later in Asia and North America.
Other Bright Spots in the European Market
After a long spell of distress Italian banks are on the rebound. Market Watch reports that Italian bank shares are up and helping European stock averages.
On Monday, Italy’s FTSE MIB FTSEMIB, +1.25% was the best performing of the major indexes, rising 1.3% to close at 17,722.66. The jump came on the back of strengthening in Italian banks as investors awaited word from a meeting between Italy’s central bank and Treasury officials about the beleaguered industry. There are expectations that a fund may be set up to deal with bad loans.
As with all investing do your homework if you want to invest in European stocks. And consider ADRs as you will be able to buy and sell on US exchanges and need to learn German!